A blog of the NYU Colloquium on Market Institutions and the Leipzig Colloquium on the Market Order

Strange Gambling

The ‘Sports Guy‘ over at ESPN.com talks about the big betting mistake he made during the playoffs:

‘Anyway, I’m talking about intentionally going for 4-0 with my wild-card picks. I thought two home teams would cover, only one of the rookie QBs would cover and two super-obvious road teams would not cover. After studying it from every angle, I locked in on Arizona and Baltimore (my favorite of the four) and already liked Indy; because the Philly-Minny game was a crapshoot, that meant Minnesota had to be the fourth pick. What I should have done: Take Arizona, Indy, Baltimore and Philly and aim for 3-1. But I was trying to be a hero — in this case, finish 4-0 — and inadvertently broke Rule 14 of the Playoff Manifesto, which specifically says, “Don’t try to be a hero, just try to make money.” Call it a lesson learned. By my wallet.’

What in the world can this fellow be talking about? (And note, he makes his living giving gamblers advice.) He seems to be saying that, by intentionally picking one of the games with the aim of getting a bet wrong, he would have been ‘safer’ than by trying to pick all four games correctly! There certainly are situations in which you can reduce your gambling risk by not ‘going for broke’, but I can’t for the life of me see how this is one of them. He calls the Philly-Minnesota game a ‘crapshoot’, presumably meaning he thought it was 50-50 that either side would cover — so how does swapping one even bet for another reduce his risk? Any ideas what he might be thinking of here?

8 thoughts on “Strange Gambling”

What was he thinking? I think I can explain. The first thing to realize is that he started out making his original picks by deciding on the shape of the overall outcome — 2 home teams, 1 rookie QB — and then making selections to fit with this overall outcome. In other words, having decided that a coin had 3/4 chance of turning up tails, he decided to pick 3 tails and 1 head for his 4 predictions.

He rues that now; he should have picked 4 tails, he thinks. In other words, he’s actually come around to your way of thinking, which is that you pick the most likely outcome for each game.

This interpretation is admittedly undercut by his calling Philly-Minnesota a crapshoot, but I think I’ve gotten at the idea he’s trying to express. The fact that his view of the world is generally incoherent and nonsensical is a separate issue.

Or, more simply, his new “insight” is that if you know that there will be 3 tails and 1 head, you should pick 4 tails (and go 3-1) instead of trying to figure out when the head will happen (and go either 2-2 or 4-0).

How would someone know that there will be 3 tails and 1 head, especially since each outcome is independently generated? Err…

Most touts are dumb. That’s the main thing that’s happening here. His thought process indicates that he’s a -EV sports bettor.

I think there are some parallels between this and what we’re hearing about macroeconomics right now. He thinks so many home teams will cover, etc, so he makes some bets that would provide that mix while only giving a cursory glance at underlying matchups. People think that a certain amount of economic activity is appropriate, so the government pumps a bunch of spending into the economy with only a cursory glance at whether the underlying projects are +EV.

My friends do these types of analysis all the time and I can never get through to them on it. He creates a framework and then bets according to that framework. I see this type of analysis with over/unders all the time. There’s no way that every over will hit today, so I think this is the most likely under to take.

Simmons was born with a very high IQ, which he has spent his entire lifetime trying to stifle in order to fit in with his average-Joe high school and college peers. He’s pretty much succeeded at this point.

You’re right, there is no way to make sense of this (that I can see). But it’s funny, until I saw where you were going with it, his analysis sounded “normal” to me, because I’ve heard this kind of talk so much from playing cards / going to the casino with people.

I know when people do stuff like picking teams for the brackets in college basketball, they have an idea like, you can get away with picking a few underdogs, but you can’t do that too much (even if you think you’re right) because the odds are against you. I.e. if you have totally “crazy” picks and end up winning, you would be a hero, but rather than go with your gut on three games in a row, maybe you should just go with the maverick pick on the ones you are most sure about. Something like that.

But I agree, even though this kind of tradeoff might exist in some situations, it doesn’t seem to in this guy’s scenario.

The problem here is the guy is betting spreads, not winner/loser — so all of the games really ought to be toss-ups if Vegas has got the spreads right. Maybe there’s some pattern like, “Generally, one favourite out of four doesn’t cover in the first round”?

I’ve always thought the best strategy in the NCAA pools is simply to pick every favourite straight the the tournament — after all, what are the odds you can pick any of these games better than the tourney selection committee?

“Or, more simply, his new “insight” is that if you know that there will be 3 tails and 1 head, you should pick 4 tails (and go 3-1) instead of trying to figure out when the head will happen (and go either 2-2 or 4-0).”

Especially since picking a head will be worse in three cases out of four, and there’s no special payoff for 4-0 in football betting!